Glossary · from the DESK dictionary
Knock-Out Certificate
A leveraged certificate that gives the investor disproportionate participation in an underlying's price move but expires immediately and completely worthless if a set knock-out barrier is touched.
In plain words
Offers substantially higher leverage than classic warrants, but with the risk of an abrupt total loss.
In more detail
A knock-out certificate expires immediately and usually worthless when the underlying touches a defined threshold. The leverage arises because only the difference between price and threshold is financed. The decisive difference from an option is finality: there is no recovery — a single touch terminates the instrument.
Example
A note on an index at 18,000 has its threshold at 17,400. The stake is 600 points rather than 18,000 — and is entirely lost on a touch.
What it means for traders
An important practical concept, in leveraged retail certificate trading.
Common pitfalls
Can be knocked out by brief price spikes even if the underlying develops as expected in the long run.
Related terms
Knock-Out Product · Knock-Out Barrier · Mini Future · Turbo Certificate
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.